Vetting Benefit Plan Vendors: 3 Tips for Cybersecurity Readiness
Employers that sponsor ERISA-governed benefit plans — including health, welfare, 401(k), and pension plans — rely heavily on third-party providers to manage records and protect sensitive participant data. But outsourcing doesn’t remove the sponsor’s fiduciary duty to safeguard that information. In fact, it raises the stakes.
Based on our experience at CSH supporting benefit plans, in addition to assessing and advising on third-party risk management, we take cybersecurity seriously and understand the essential role it plays in protecting your plan. Our employee benefit plan auditors, qualified plan administration consultants, and cybersecurity experts have compiled three basic tips to arm you with the questions you should be asking your benefit plan vendor.
Assess Security Standards and Validation
Begin by asking providers about their cybersecurity policies and practices. Their protocols should align with standards like NIST or ISO/IEC 27001. The most reliable partners validate their systems through independent, third-party audits. Request access to audit results that confirm compliance with data protection standards.
Investigate Reputation and Incident History
Explore the provider’s history of handling security incidents. Transparency is key — ask how they’ve responded to breaches in the past, and check for any related legal or regulatory issues. Also review their insurance coverage to ensure it includes cyber liability and internal threats. These details help gauge how prepared they are for emerging risks.
Include Security Terms in the Contract
Strong contracts reinforce good cybersecurity. When working with benefit plan vendors, key terms to include are:
Third-Party Security Audits: Required on an annual basis.
Data Confidentiality Commitments: Clear standards around privacy and information use.
Breach Notification Expectations: Specific timeframes and cooperative response measures.
Compliance with Laws: Assurance the vendor follows all applicable data security regulations.
Adequate Insurance Coverage: Including cyber liability and errors and omissions.
Why It Matters — and How CSH Can Help
A breach involving participant data can be deeply damaging — to your organization, your plan participants, and your reputation. That’s why working with a partner who understands both benefit plan operations and cybersecurity risk is so critical. At CSH, we combine deep experience supporting ERISA plans with a strong commitment to protecting sensitive data. Our clients rely on us not just for plan administration support, but for peace of mind in a complex digital environment.
For those of you who rely on other partners, or are simply interested in understanding your options when it comes to third-party risk management, check out our solutions.
Tiffany L. White
Shareholder
